How Do We Get The STEEM to RISE? Would the Witnesses please Discus this with me and help me understand?
The top Witnesses have a lot of influence to drive change on our behalves, as we have voted them in, and so I would like you all to read this, including as many witnesses as possible, and to have a constructive conversation on where we are heading in terms of SBD, STEEM and the value of both with or without the SBD peg being reintroduced, and better enforced than it hasn't been so far. Perhaps I am right, and perhaps I don't understand. I am here to learn either way...
This is my argument:
SBD is in oversupply, but is overvalued due to its liquidity in comparison to that of STEEM's. This is holding STEEM back from staying at a higher $ value
The oversupply of SBD due to post rewards being calculated at the SBD peg, which doesn't exist right now, and the countermeasures being employed to overcome the higher SBD/STEEM debt ratio seem to be working against each other in some respect. The post rewards being split between STEEM and SBD works on the premise that SBD is at a fixed peg of 1 SBD = 1 USD, and that reducing the supply of SBD will have no effect on the overall price of SBD. This is not the reality of the economics happening right now. I'm not saying it isn't working at all, I just don't think it's nearly effective enough with SBD being free to go to any price the market dictates. Increasing the supply of STEEM is also having a downward effect on the STEEM price, and demand is not increasing in line with supply.
Add to this the whole cryptosphere heading south over the last few months, and we end up with SBD getting down near the peg level, but still not enforceable, and STEEM following reasonably close behind. A big upward movement in the crytpo market will most likely see both STEEM and SBD move up as well, while the system continues to try to reign in the SBD/STEEM debt ratio.
But what if the Peg was reached, and then actively enforced?
If SBD got down to 1 USD, and the peg was then enforced through bidirectional conversion, if the price of STEEM went up, the debt ratio would automatically reduce, and when STEEM fell, the platform would kick into action when the debt ratio got too high, and stop producing SBD if that ratio got too high.
Make STEEM more liquid
So if rewards are that easy to split between SBD, STEEM, and SP, and if the peg were to be enforced, why not give us another option for our post rewards settings? Maybe this: STEEM 50/50 (STEEM 50% / SBD 50%)
Would that not encourage us to transact in STEEM more readily, simply because we can get it more easily? Services on the platform could set their prices in STEEM (Especially voting bots... the delegation market already does). STEEM would be so much more liquid, and easier to transact with, or power up. The Steem Blockhain would truly be powered by STEEM, and SBD would be a secondary token of only conversionary value (like it should be). Is "conversionary" even a word?
Having this solution could be implemented on 2 ways: Fix the peg, and enable bidirectional conversion to hold it at the peg, or introduce a proper SBD price feed so that we don't get over-inflated post rewards, but more importantly we don't get an oversupply of SBD which will push the SBD/STEEM debt ratio higher than it should be.
Look long-term
It is a big adjustment, and requires a change in mindset on many levels, one of them being the acceptance of lower post reward $ values in the shorter term, in the interests of helping STEEM gain value through its utility and liquidity in the longer term.
I would be interested to see the long-term reasoning for allowing SBD to continue as it is now, and how having both SBD and STEEM fulfilling much of the same role outside of platform influence, is of any benefit to the STEEM price in 6 or 12 or 72 months time.
Can STEEM reach new highs, and continue to go higher the way SBD and STEEM are working in the economy now? I have my doubts. Please help me understand how it can.
Who knows, maybe I'll put my hand up to be a STEEM Witness one day, once I understand things a little better.
Quick reply, (tl;dr)
😉 😊 😋 😎 READ THE WHITEPAPER!
Not that some of the ideas may or may not work,
but STINC has all the control, not the "witnesses"...
Witness = watch, record, REPEAT
Now as far as "influence" they could organize these
thoughts and "guide the community" but almost all
of these suggestions involve coding changes and will
necessitate a new Hard Fork. ANYBODY can be a "WITNESS"
but these are all changes that must be initiated by STEEMIT INC. (STINC)
Have a nice day! <3
The Witness role is to provide consensus, and implement change when it comes, provided the majority accept that change. They therefore have a certain amount of influence to initiate change throught discussion, pull requests etc... They're not just passengers confirming blocks. They can also reject change through consensus not to implement an update to the code.
its definitely an interesting idea! im not an economist, so i have no tangible thoughts on what youre saying. im going to ask a few of my financial folks what they feel. grrat writeupl B! :)
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TrufflePig@underground's answer finishes the discussion. The Higher Ones have all the power...
Not really. It is us who vote them in, and they have the power to accept or reject change on our behalf. They therefor do have a certain degree of influence over what changes are made, and power to drive change which they may see as beneficial to the platform. The big accounts have more power to pick the top witnesses, but a lot of small accounts voting for a witness together has just as much influence.
Have you ever joined/listened to witness discussion? Even for HF 20 the top witnesses cannot reach a unanimous of yes still, imagine in answering your questions, Brett 🤣
There is some discussion on it here:
https://steemit.com/steem/@timcliff/what-needs-to-happen-to-reach-usd10-steem-in-2018-discussion
Your assessment based on SBD is incorrect. The price of SBD being higher than $1 USD is actually an indication that it is under-supplied, not over-supplied. Also, the price of SBD being above $1 USD does not really have a negative impact on the price of STEEM.
Perhaps in some ways I misunderstand, but I don't think it's completely wrong...
This could also a situation of over-demand due to no alternative, rather than under-supply. SBD is the only liquid currency being earned here, until the SBD/STEEM debt ration gets a little high and liquid rewards get split. The demand for liquidity (SBD) is what has pushes SBD up. The platform is designed around SBD at a fixed price at $1 USD, and so has flooded the rewards with SBD due to the comparatively higher STEEM price. Yet, it has still not been able to keep up with demand, and so the price of SBD has increased in the past. My argument is to get the SBD peg fixed properly, and make STEEM more liquid through post rewards , so that the availability of STEEM via post rewards will see it being used more for transactions, and demand for STEEM increase, while demand for SBD decreases proportionally.
Agreed. I have no argument against this statement, but because STEEM is not easily available to transact with, SBD has been fulfilling the function of liquidity for day-to-day transactions, and continues to do that while rewards are paid only in SBD and SP, and there being no conversion from/to STEEM. When SBD price goes up, STEEM (SP) becomes cheap because the rewards are paid out with much more SBD than they should be, and demand for STEEM increases, pushing up the STEEM price.
When SBD comes back down, it drags STEEM with it for exactly the same relational reason. Pay out reward in STEEM, and people can either power it up, or transact with it, or convert it into SBD if there is bidirecitonal conversion.
There are so many scenarios to process, but one where SBD and STEEM are essentially being used for the same thing (not talking STEEM POWER here), the 2 will be joined at the hip in terms of value, and the system will keep dragging both down towards the $1 peg by design.
The amount of SBD tokens that are printed has zero relationship to the price of SBD though.
Whether you fix the peg or not will have no influence on whether the blockchain pays STEEM or SBD for rewards though. It is only based on the amount of SBD tokens in circulation compared to the marketcap of STEEM.
I don't know if one would call it "easy" but anyone can trade SBD for STEEM on the internal market.
You seem to be confusing this change with fixing the peg. Fixing the peg and paying our rewards in STEEM are two completely separate and unrelated changes.
The amount of SBD printed out is directly rlated to the Price of STEEM, I know this, but post reward calculations work on a $1 USD/SBD price. With SBD being much higher, we've been getting far more SBD than we would have if the true SBD price was used.
Perhaps fixing the peg and re-enabling conversion (in both directions this) would result in STEEM becoming more easily available, and there would be greater incentive to transact in STEEM rather than SBD, without changing the post reward options to include a liquid portion of STEEM.
My point is that we need STEEM to be primary currency for making transactions, rather than using SBD because it is just there. You have to jump through hoops for STEEM, whereas SBD is in your wallet with one click of the Redeem Rewards button.
SBD is getting in the way of STEEM reaching, and staying at higher prices because of this.
Really interesting view. I hadn’t thought of it that way before. “Fixing the peg” is really not the solution to this problem, but it is definitely one to think about.
Possibly not the whole solution, but it will go a fair way to helping STEEM be the currency of the platform, and getting SBD back to its designed function of being a debt instrument. By pegging it, you draw investment attention away form SBD, and into STEEM.
You also create a "safe haven" where you can trade in other cryptos( or STEEM), and then exit the market into SBD instead of fiat, knowing it has a stable $1 USD =1 SBD. There are other areas it could help overall, the main one being that the true value of the STEEM platform is actually found in STEEM, and not in a combination of SBD and STEEM, which are to a large degree fulfilling overlapping roles.
Again, to achieve all this STEEM needs to be more easily available outside of STEEM POWER, for daily transactional use. Greater utility will translate to greater value of STEEM.